INTEGRYS ENERGY GROUP, INC. PERFORMANCE STOCK RIGHT AGREEMENT
Exhibit
10.6
THIS
AGREEMENT is entered into as of
February 14, 2008, (the “Grant Date”), by and between INTEGRYS ENERGY
GROUP, INC. (the “Company”), and __________________ ____________________ (the
“Participant”). This Agreement sets forth the terms, rights and
obligations of the parties with respect to the grant of Performance Stock Rights
to the Participant. This agreement shall not become effective until
the Participant signs and returns the “Acknowledgement Form” attached
hereto.
The
Performance Stock Rights are granted
under, and are subject to, the terms of the Integrys Energy Group, Inc. 2007
Omnibus Incentive Compensation Plan (the “Plan”), which are specifically
incorporated by reference in this Agreement. Any capitalized terms
used in this Agreement which are not defined shall have the meaning set forth
in
the Plan.
The
parties to this Agreement covenant
and agree as follows:
1. Grant
of
Performance Stock Rights. (a) Subject
to the terms of this
Agreement, the Company grants to the Participant Performance Stock Rights
representing the right to receive ______ shares (“Target Award”), of the common
stock of the Company, par value $1.00 (“Stock”), in the event certain
Performance Goals specified herein are satisfied. The Participant
obtains no ownership interest in the Company and will not be considered a
shareholder of the Company by virtue of the grant of Performance Stock Rights
hereunder until such time as Stock may be issued to the Participant as a Final
Award.
(b) In
the event of certain corporate
transactions described in Section 12 of the Plan, the number of Performance
Stock Rights will be adjusted by the Compensation Committee of the Board of
Directors of the Company (the “Committee”). The Committee’s
determination as to any adjustment shall be final.
2. Performance
Period. Subject to the
provisions of Section 7, the period from January 1, 2008 to December 31,
2010.
3. Performance
Measures.
(a) Total
Shareholder Return (“TSR”). The quotient obtained
by
dividing (1) the Shareholder Return with respect to a share of common stock
of
the Company, by (2) the Beginning Market Price of a share of common stock of
the
Company. For this purpose:
(1) The
Shareholder Return means the
cash dividends paid on a share of common stock during the Performance Period,
increased by (if positive) or reduced by (if negative) the change in stock
price
from the Beginning Market Price of a share of common stock to the Ending Market
Price of a share of common stock.
(2) The
Beginning Market Price of a
share of common stock is the average closing market price of a share of common
stock for the 30 trading days immediately preceding the first day of the
Performance Period as reported by the securities exchange on which such stock
is
principally traded.
(3) The
Ending Market Price of a share
of common stock is the average closing market price of a share of common stock
for the 30 trading days immediately preceding the last day of the Performance
Period as reported by the securities exchange on which such stock is principally
traded.
(b) Comparison
Group. All of
the companies included in the Towers ▇▇▇▇▇▇ database of publicly traded utility
companies.
4. Determination
of Final Awards.
(a) Presumptive
Award. As soon
as practicable following the completion of the Performance Period, the Committee
will determine the TSR of the Company and of each company in the Comparison
Group. The Committee’s determination will be final and binding on all
persons. The Participant’s presumptive award shall be determined in
accordance with the following table; provided that any fractional share of
Stock
that would otherwise result from the foregoing calculation shall be
disregarded.
|
Company
TSR In Relation to
TSR
of All Comparison Group
Companies
|
Presumptive
Award Equal to
the
Following Percentage of
the
Target Award*
|
|
90thPercentile
or Greater
75thPercentile
50thPercentile
25thPercentile
Below
the 25thPercentile
|
200%
150%
100%
50%
0%
|
*
The Presumptive Award for performance
between points on the payout schedule would be interpolated. If the
formula produces an award of a fractional share, the Presumptive Award will
be
rounded to the next higher whole number of shares.
(b) Final
Award. The
Presumptive Award is used as a guideline for the Committee in determining the
Final Award to be made to the Participant, and the Participant obtains no rights
as a result of the determination of the Presumptive Award. In
determining the Final Award to be made to the Participant, the Committee, in
its
sole discretion, may increase or decrease the amount of the Presumptive Award;
provided that the Committee will not increase the amount of the Presumptive
Award applicable to the Participant if the Final Award is intended to comply
with Section 162(m) of the Internal Revenue Code and if the Participant is
a
Covered
-2-
Executive
(as defined in the Plan) for
purposes of Section 162(m) of the Internal Revenue Code. Except with
respect to the portion (if any) of the Final Award payment of which is deferred
in accordance with the Integrys Energy Group, Inc. Deferred Compensation Plan,
the Final Award will be distributed to the Participant by March 15 of the
calendar year following the calendar year in which the Performance Period
ends.
5. Dividend
Equivalents. The
Participant shall not receive any cash or other consideration to reflect
dividends that would have been paid or accrued had the Performance Stock Rights
been actual shares of Stock during the Performance Period.
6. Effect
of
Termination of Employment.
(a) Except
as set forth in subsections (b)
and (c) below and Section 7 below, or as otherwise determined by the Committee,
the Performance Stock Rights will be cancelled immediately and without notice
to
the Participant, and no Final Award will be made, in the event of the
Participant’s termination of employment from the Company and its Affiliates
prior to the last day of the Performance Period.
(b)
If the Participant’s employment or service terminates as a result of death or
disability (as determined by the Committee based upon the definition set forth
in the Company’s long-term disability plan), the Participant’s Performance Stock
Rights will not be cancelled upon termination of employment, and (1) if the
Participant’s termination occurs on or after December 31 of the calendar year in
which the Performance Period begins, the Participant (or the Participant’s
estate) may be eligible to receive a Final Award, determined in accordance
with
Section 4 and this Section 6, following the conclusion of the Performance
Period, or (2) if the Participant’s termination occurs prior to December 31 of
the calendar year in which the Performance Period begins, the Participant (or
the Participant’s estate) may be eligible to receive a pro-rated Final Award,
determined in accordance with Section 4 and this Section 6, following the
conclusion of the Performance Period. The pro-rated award shall be
equal to the Final Award to which the Participant otherwise would have been
entitled if employment had not terminated, multiplied by a fraction, the
numerator of which is the number of full months of service that the Participant
completed during the calendar year in which the Performance Period begins and
the denominator of which is twelve (12). If the foregoing calculation
results in vesting of a factional share, the number of shares included in the
Participant’s Final Award will be rounded to the next higher whole number of
shares. Except with
respect to the portion (if any) of the Final Award payment of which is deferred
in accordance with the Integrys Energy Group, Inc. Deferred
Compensation Plan, the Final Award will be distributed to the Participant by
March 15 of the calendar year following the calendar year in which the
Performance Period ends.
(c)
If the Participant’s employment or
service terminates as a result of retirement on or after age fifty-five (55)
with ten (10) or more years of service, or retirement on or after age sixty-two
(62), the Participant’s Performance Stock Rights will not be cancelled
upon termination of employment, and (1) if the Participant’s retirement
occurs on or after
-3-
December
31 of the calendar year in
which the Performance Period begins, the Participant may be eligible to
receive a Final Award, determined in accordance with Section 4 and this Section
6, following the conclusion of the Performance Period, and (2) if the Participant’s
termination occurs prior to December 31 of the calendar year in which the
Performance Period begins, the Participant may be eligible to receive a
pro-rated Final Award, determined in accordance with Section 4 and this Section
6, following the conclusion of the Performance Period. The pro-rated
award shall be equal to the Final Award to which the Participant otherwise
would
have been entitled if employment had not terminated, multiplied by a fraction,
the numerator of which is the number of full months of service that the
Participant completed during the calendar year in which the Performance Period
begins and the denominator of which is twelve (12). If the foregoing
calculation results in vesting of a factional share, the number of shares
included in the Participant’s Final Award will be rounded to the next higher
whole number of shares. Except with respect to the portion
(if
any) of the Final Award payment of which is deferred in accordance with the
Integrys Energy Group, Inc. Deferred Compensation Plan, the Final
Award will be distributed to the Participant by March 15 of the calendar year
following the calendar year in which the Performance Period ends.
7. Change
in
Control. Upon
the occurrence of a Change of Control (as defined in the Plan), the Performance
Period shall be terminated, and the Participant will be entitled to a Final
Award based upon the Target Award (or, if greater, the then projected Final
Award) prorated for the portion of the Performance Period that has been
completed as of the date of the Change in Control. Except with respect to the
portion (if any) of the Final Award payment of which is deferred in accordance
with the Integrys Energy Group, Inc. Deferred Compensation Plan, distribution
will be made as soon as is administratively practicable following the Change
of
Control; but in no event later than the fifteenth (15th)
day of the third month following
the month in which occurs the Change of Control.
8. Tax
Withholding. Upon the issuance of
Stock
pursuant to a Final Award, the Company may satisfy its withholding obligations
in any manner determined by the Committee, including by withholding a portion
of
the Participant’s compensation or by withholding a number of the shares of Stock
included in any Final Award that have a Fair Market Value, as determined by
the
Committee, equal to the amount required to be withheld. The Fair
Market Value of fractional shares of Stock remaining after the withholding
requirements are satisfied will be paid to the Participant in
cash. The Company may also require the Participant to deliver a check
for the Company’s withholding tax obligation prior to effecting the transfer of
shares pursuant to a Final Award.
-4-
9. Miscellaneous.
(a) The
Participant (or his legal
representatives, the executor of his estate or his heirs) shall not be deemed
to
be a shareholder of the Company with respect to any of the Performance Stock
Rights until shares of Stock have been issued pursuant to a Final Award and
the
Company’s withholding tax liability has been satisfied, to the Committee’s
satisfaction.
(b) The
Performance Stock Rights shall
not be transferable by the Participant; provided that following the
Participant’s death, any Final Award made with respect to the Participant will
be paid to the Participant’s estate or to such person as the executor of the
estate certifies as being entitled to such payment as a result of the operation
of the Participant’s last will and testament or as a result of the laws of
intestate succession.
(c) It
is fully understood that
nothing contained in this Agreement or the Plan shall interfere with or limit
in
any way the right of the Company or any Affiliate to terminate the Participant’s
employment at any time nor confer upon the Participant any right to continue
in
the employ of the Company or any Affiliate.
(d) As
a condition of the granting of
Performance Stock Rights under this Agreement, the Participant agrees, for
himself and his legal representatives, the executor of his estate, and his
heirs, that the Plan and this Agreement shall be subject to discretionary
interpretation by the Committee and that any interpretation by the Committee
of
the terms of the Plan and this Agreement shall be final, binding and conclusive
on the Participant, his legal representatives, the executor of his estate and
his heirs. The Participant, his legal representatives, the executor
of his estate and his heirs shall not challenge or dispute the Committee’s
decisions.
(e) The
Committee may modify the
Performance Stock Rights at any time. However, no modification,
extension or renewal shall (i) confer on the Participant any right or benefit
which he would not be entitled to if new Performance Stock Rights were granted
under the Plan at such time or (ii) alter, impair or adversely affect the
Performance Stock Rights or this Agreement without the written consent of the
Participant; provided that the Committee need not obtain written consent of
the
Participant for a modification of the Performance Stock Right to the extent
that
the Plan specifically permits the Committee action or to the extent that the
Committee deems such modification necessary to comply with any applicable law,
the listing requirements of any principal securities exchange or market on
which
the shares underlying the Performance Stock Right are then traded, or to
preserve favorable accounting or tax treatment of the Performance Stock Right
for the Company; and provided further, that unless the Committee determines
that
a Performance Stock Right is not intended to comply with the requirements of
Section 162(m) of the Internal Revenue Code, the Committee shall not take any
such action with respect to a Participant who is a Covered Executive (as defined
in the Plan) if such action would cause any Final Award granted to the
Participant to cease to qualify as “qualified performance-based compensation”
for purposes of Section 162(m) of the Internal Revenue Code.
(f) No
shares of Stock will be issued
pursuant to a Final Award unless and until the Company has determined to its
satisfaction that such issuance complies with all
-5-
relevant
provisions of applicable law,
including the requirements of any stock exchange on which the Stock may then
be
traded.
10. Governing
Law. This
Agreement shall be governed by the internal laws of the State of Illinois,
without regard to the principle of conflict of laws, as to all matters,
including, but not limited to, matters of validity, construction, effect,
performance and remedies. No legal action or proceeding may be
brought with respect to this Agreement more than one year after the later of
(a)
the last date on which the act or omission giving rise to the legal action
or
proceeding occurred; or (b) the date on which the individual bringing such
legal
action or proceeding had knowledge (or reasonably should have had knowledge)
of
such act or omission. Any such action or proceeding must be commenced
and prosecuted in its entirety in the federal or state court having jurisdiction
over ▇▇▇▇▇ County, Wisconsin, or ▇▇▇▇ County, Illinois, and each individual with
any interest
hereunder agrees to submit to the personal jurisdiction thereof, and agrees
not
to raise the objection that such courts are not a convenient
forum. Such action or other legal proceeding shall be heard
pursuant to a bench trial, and the parties to such proceeding shall waive their
rights to a trial by jury.
11. Severability. In
the event any provision
of the Agreement is held illegal or invalid for any reason, the illegality
or
invalidity will not affect the remaining provisions of the Agreement, and the
Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included.
12. Terms
of
Plan Govern. All
parties acknowledge that this option is granted under and pursuant to the Plan,
which shall govern all rights, interests, obligations and undertakings of both
the Company and the Participant.
By: __________________________
Title: Senior
VP & Chief HR Officer
-6-
ACKNOWLEDGEMENT
FORM
I
have read the terms of the Integrys
Energy Group, Inc. Performance Stock Right Agreement, dated February 14,
2008, and I hereby declare that I understand and agree to be bound by
the terms and conditions of the Agreement.
______________________________________
Participant
Print
name:_____________________________
PLEASE
DETACH THIS ACKNOWLEDGEMENT FORM
FROM THE PERFORMANCE STOCK RIGHT AGREEMENT AND RETURN IT TO THE GREEN BAY HUMAN
RESOURCES DEPARTMENT. YOUR PERFORMANCE STOCK RIGHT WILL NOT BECOME
EFFECTIVE UNTIL THE COMPANY RECEIVES THIS ACKNOWLEDGMENT FORM.